It is interesting to trace the connection between Toyota’s recent troubles and faulty strategic self-perception. As a Prius owner myself, I had already discovered the slight electronic glitches on ice and over potholes, but they seemed relatively insignificant and I had shrugged them off (although admittedly my car is the earlier version).
A bigger part of the problem in my estimation is that Toyota does not know what to do after ultimate success. Having become the world’s biggest carmaker in 2008, by October 2009 president Akio Toyoda said in a speech that the company was one step away from ‘capitulation to irrelevance or death.’ He was quoting the final stage of Jim Collins’ five step framework in How the Mighty Fall...
Read moreLooking into the future often seems like watching a shifting reflection in a distorting mirror. In the last year, we have moved from the prospect of worsening global financial meltdown to a recovery that is presenting at least the appearance of normality.
Under the surface things are not so reassuring. It feels uncomfortably as if this part of the world has shot itself resoundingly in both feet, and its power is ebbing away. This applies to both the US and the UK, but the UK in particular seems to have nowhere to go in conventional economic terms. For the moment it is living on borrowed time, waiting for the full consequences to play out...
Read moreEarlier this week there were two signals that the oil price is threatening to return to dangerous levels as economic growth begins to pick up. On Monday, the FT reported that forward oil prices are now $20 higher than two years ago, even though spot prices are much lower. And on Tuesday, the Guardian reported allegations by a whistleblower at the International Energy Agency in Paris that the agency has been underplaying the rate of oilfield decline, while overplaying the chance of finding new oil – suggesting that the peaking of global oil production is much closer than they previously maintained.
This news is exactly what would be expected if the world actually is entering the zone of the global oil production peak...
Read moreYesterday evening I took part in a wide-ranging discussion in London that included a number of senior civil servants. Although I need to respect the anonymity of the participants, I do have permission to mention one fairly abstract point that caught my interest.
A view was expressed that rising complexity in an instantaneously interconnected and interdependent world has reached the point where governments can no longer exert control. Now, without debating the point about whether governments were ever really in control, I would agree that the complexity of what they deal with is certainly increasing...
Read moreLast Monday, Nouriel Roubini, writing in the Financial Times, said there are now three open questions about the economic crisis: when will it end, what shape will it be, and are there risks of relapse? Clearly these are pertinent questions, but they reflect a general tendency for commentary to be framed in terms of a desired return to normal, a restoring of economic growth. The assumption that this is a ‘normal’ crisis, not much more than a really nasty lurch in business as usual, has meant that the reforms deployed so far have been relatively superficial, and possibly even counter-productive.
Obviously, an urgent response was necessary to rescue normal functioning. But now that this seems to have staved off the worst, this is the stage to be asking about neglected deeper aspects of the crisis. Particularly if they hint that this has been just a foreshock of something larger – meaning there are still things that must be mended to avoid a much worse crisis later...
Read moreIn the last week, the Economist and the Financial Times have both told us that macroeconomics is in a state of meltdown because it failed to prevent or predict the global financial crisis. This is more than a spat in the corridors of academe. In the real world, it actually makes it harder to predict the future of the current financial crisis, and potentially increases volatility.
The problem is that we always rely on some kind of interpretative theory to anticipate the future. If everyone agrees on the appropriate macroeconomic prescription then the future outcome looks predictable. But if the macroeconomists advising governments are divided into two warring factions, who should investors – on whom a recovery partly depends – believe?
Read moreIn 2007 Australia announced plans to ban incandescent light bulbs from November 2009 onwards, and in March this year the EU adopted a regulation that will phase them out from September 2009 onwards. Several other countries are also planning phase-outs. Much of the credit for this is attributed to a campaign called Ban the Bulb, which has been arguing for the banning of incandescents since 2005 on the grounds that it is one of the easiest and most obvious ways to save energy and carbon emissions.
In the US, where market-based solutions are the preferred approach, a 2007 law simply called for light bulbs to use 25–30% less energy by 2014, which appeared to rule out incandescents. In fact, it has stimulated a burst of innovation that seems to show that the old bulbs are far from dead...
Read moreThere seems to be a widespread perception that global climate models capture all the important factors that will determine the future of the global climate. The previous post showed how changes in the underlying assumptions can cause the models to indicate less change, at least in the short term. But it is also relatively easy to show how things could be much worse than any model can currently capture.
What if the global system is now so stressed that major system shocks are triggered in much shorter timescales than we are currently expecting. What might they be?
Read moreJust as climate scientists finally succeeded in convincing everyone that global warming is imminent, the latest versions of their models seem to be leading them to take a more cautious line.
In May last year, a study led by Noel Keenlyside of the Leibniz Institute of Marine Sciences in Germany reported that due to multi-decade-long changes in ocean currents, "global surface temperature may not increase over the next decade, as natural climate variations in the North Atlantic and tropical Pacific temporarily offset the projected anthropogenic warming." This was significant enough for Nature to include it in their year-end summary of...
Read moreOn Wednesday this week I attended the GAIN Business Alliance Forum in Amsterdam, where I gave a presentation on the future prospects for global food production. I was not aware of GAIN before receiving the invitation to present at the forum, but it turns out to have a tightly focused and potentially very effective purpose. GAIN stands for Global Alliance for Improved Nutrition, and is a Swiss foundation that aims to reduce malnutrition through food supplementation and related strategies. It was created in 2002 at a special UN session on children, and funders include the Bill and Melinda Gates Foundation.
The premise is that malnutrition stunts the physical, cognitive and economic development of almost a billion people worldwide and can be prevented for about 10 cents per person per year. Micronutrient deficiencies – such as iron, iodine and zinc – can be remedied by...
Read moreSince late last year there has been a critical shortage of a key chemical solvent, acetonitrile. This chemical is produced as a by-product of plastics manufacturing for the car industry, and as the global financial crisis caused demand for cars to collapse, supplies have all but disappeared. Acetonitrile is vital in the testing and production of foodstuffs and pharmaceuticals, and prices have rocketed...
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